The state of digital retail in ASEAN

Digital retail underlies a good e-Commerce experience for customers. This is especially important for online retailers now, given how online shopping is one of the most popular pastimes of people living in a highly digitized world. 

As the pandemic continues migrating people online at an aggressive pace, the adoption of omnichannel shopping and fulfillment is seeing increasing adoption by both consumers and retailers alike. 

This is apparent in Southeast Asia, where research has revealed that digital retail in the region grew 85% year-on-year and is on track to see almost 80% of consumers go digital by the end of 2021. 

This also holds particular significance, as it will outpace the likes of China, Brazil, and India, according to a Facebook and Bain & Company report. 

Tech Wire Asia had the chance to speak to Andrew Martin, head of AI & data company Databricks, on the state of digital retail in SEA. 

What does digital retail mean, exactly?

Digital retail today can be defined as an omnichannel experience that allows consumers to easily maneuver and engage with a business’s platform. This, in turn, provides the information and education to facilitate purchasing decisions.

With uncertainty at the core of today’s decision-making, retail and consumer goods

companies must focus on the speed and agility of collecting and understanding data as a core business competency. 

These companies need to be quicker at collecting customer data to meet new demand, be nimble about data analysis so that costs and supply chain inefficiencies are reduced, and stay flexible when responding to dynamic market shifts. 

What contributed to the massive 85% Y-o-Y growth of digital retail? 

The boom in Southeast Asia (SEA) for consumer spending and retail is driven largely by online channels. Compared to more traditional retail models, online formats have two distinct advantages that are empowering accelerated growth. 

They include providing a hassle-free digital experience; and new demand for more engaging purchase journeys.

A contributing factor is changing consumer behavior brought on by the pandemic. During lockdowns, it was found that Southeast Asians spent, on average, an hour more daily on the Internet and social platforms. 

This has thus shifted the average SEA consumer’s purchase journey towards social and online channels. Today, over 80 percent of discovery, research, and evaluation of retail products by SEA consumers are done online, with social media and video as the predominant formats for these phases in the customer purchase journey.

Another contributing factor is the increasing consumer demand for end-to-end digital experiences. 

Starting from the first point of encounter online, to frictionless payments, flexible delivery methods, and responsive after-sales service, customers today look for a hassle-free purchasing experience, and this on its own is empowering the accelerated growth of digital retail. 

Why should we draw comparisons with China, Brazil, and India?

Over the last two decades, India and China have become significant players in the digital landscape, and are seeing a growing presence within the products software, and hardware industries. 

In 2019, China’s digital economy was speculated to cross US$5 trillion — which is a third of the country’s total Gross Domestic Product (GDP).

India’s current digital economy is estimated to be worth around US$300 billion (12% of the GDP). Similarly, Brazil, the fifth largest nation in the world, is enjoying a booming e-Commerce sector that expects 138 million online shoppers by 2025.

Despite the robust growth of these markets’ digital economies, the emerging potential of SEA’s fast-growing and large middle-class population is estimated to approach 350 million people with a combined disposable income of US$300 billion.

This is a great opportunity to tap into an increasing appetite for e-Commerce and digital experiences that can either leapfrog or at least keep pace with the other digital powerhouses.

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